There are times when analysing the icy, hard facts is the only option for assessing your performance. The bottom line is that if you are not profitable throughout a variety of trades, you will ultimately go out of business. It’s critical to evaluate your performance realistically. But if you’re a trader like most others, your insatiable need to succeed takes control. You only perceive what you want to perceive, yet an outsider would notice that you are on the verge of collapsing into the abyss but are unaware of it. Contrary to popular belief, traders are more likely to suffer from it. It might be quite difficult to evaluate our performance honestly since facing the cold, harsh truths can hurt one’s ego.
Focusing solely on performance outcomes isn’t always beneficial from a psychological standpoint. For example, developing your trading abilities takes time if you are a beginner trader. You’ll become frustrated if you have unrealistic expectations for performance results and deadlines. However, if you lose a lot of money trading, you can accumulate so much debt that it would be difficult for you to recover your losses. Realistically examining the cold, hard realities is a requirement, not an option. Let’s take a look at a few well-known statistics that show how successful you are.
First off, what is your hit rate? How often do you receive payment? Does it fall within the 20%, 10%, or lower bracket? It’s crucial to take into account your past success and establish a rough estimate of the percentage of transactions you close that are profitable. It gives you a feeling of how you are performing even if it is not the only metric you should take into account. The disadvantage of only using this indicator is that you might unintentionally want to execute a few little profitable transactions in order to increase your hit rate.
Finally, it’s crucial to consider your account’s size and commission fees. Commissions will reduce your overall revenues if your account is modest. Although account size does matter, many novice traders want to hold onto the hope of becoming rich despite having a small account, so they avoid giving account size and commission fees their full attention. Don’t make oneself vulnerable to failure. To make money, you must have money. It’s a good idea to consider your trading expenses and modify your objectives if necessary. If your account size is too modest for your goals, you might need to take on a second job in order to accumulate investing funds, for instance.
People tend to be eternally optimistic. Realistic thinking must be used to temper optimism. Don’t be hesitant to evaluate your trading results objectively. You can correct your route midstream so that, in the long run, you will be lucrative by regularly and honestly evaluating your performance.